Close DRYS Calls

Weak Market, Time to Move

By Bryan Bottarelli
Wednesday, March 26, 2008 10:49 AM EDT
Wed, 26 Mar 2008 14:49:00 GMT

Dear Bottarelli Research Member,

The major market indices are opening the trading session on a down-note this morning — and this could be a sign that the recent bullish run as fully exhausted itself. If that’s the case, then we’ll be in fine shape holding into our DIA April 114 Puts (DIA PJ). Looking at the DIA chart below, even a re-test of the 50-day moving average at DIA 122 (which is over 200 points lower) could still establish a bullish support level. So in other words, it looks like both the bulls and the bears expect a downside move over the next few sessions. As a result, I’d like to take on some defensive positions.

DIA

As you know, we’re currently holding only the DIA puts (mentioned above) and DRYS April 65 Calls (DQR DM). We entered these calls on March 18th for $4.66 per contract, and they have traded as high as $5.20 in today’s action. But since hitting those levels, they’ve moved back down to our original entry price. Faced with this situation, I’d like to take on a cautionary position and close out this play now. There’s no sense in fighting against a weak market, so let’s limit our upside exposure and take a very minimal loss on these DRYS calls and move into something more profitable.

DRYS

PLAY: Sell your DRYS April 65 Calls (DQR DM) at market, good for the day.

I’ll be out later today with a new play (possibly on gold or oil) which profits off a weak market environment, but until then:

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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